As Philippines struggles with elevated Covid cases, the Philippine central bank is expected to keep its benchmark interest rate at a record low on Thursday (Aug 12).

According to analysts surveyed by Bloomberg, key rates will be left unchanged at 2%. The central bank has also pledged to keep policy accommodative for ”as long as necessary.”

The Philippines economy fell back into contraction in the second quarter and is expected to decelerate as Delta wrecks havoc in Southeast Asia. Earlier, the Philippine government forecasted a full-year growth of 6%-7%, a number it might not reach.

Meanwhile, late on Wednesday (Aug 11), Bernama reported that the Central Bank of Malaysia has released the revised Reference Rate Framework, under which the Standardised Base Rate will replace the Base Rate (BR) as the reference rate for new retail floating-rate loans starting from August 1, 2022.

Changes to the Standardised Base Rate will only occur following changes in the overnight policy rate (OPR), which is determined by the central bank’s monetary policy committee, it added.

The central bank’s Governor also assured that consumers will find it easier to understand changes in their loan repayments as the OPR will be the only driver of the Standardised Base Rate.

The central bank added that the shift towards the Standardised Base Rate following the revision in the Reference Rate Framework does not represent a change in the monetary policy stance of the bank’s monetary policy committee.

Other components of loan pricing such as borrower’s credit risk, liquidity risk premium, operating costs, profit margin, and other costs will continue to be reflected in the spread above the Standardised Base Rate, said the central bank.

It was also mentioned that the shift towards the Standardised Base Rate will have no impact on the effective lending rates of existing retail loans, which will continue to be referenced against the Base Rate (BR) and Base Lending Rate (BLR).

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